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A Challenger to Bitcoin Shows Up

25.11.2015

Competitors of bitcoin

Bitcoin technology has always been and remains the most advanced for the last decade. As of today there are no alternatives to this cryptocurrency, but attempts to create something similar are in progress; recently bank UBS announced its new developments in this direction.
In particular, it is a matter of establishing its own database of all transactions, carried out with newly-made money, which is known unofficially as USC. According to the bank representatives, the technology has been designed to reduce elapsed time of payments and cut down expenses for carrying out operations. Well, will it become a serious competitor to Bitcoin?
Bitcoin affords many benefits towards money exchange in comparison with regular, traditional methods. It is lower in cost; operations with Bitcoin due to a block-chain (mathematically flawless database) are very speedy; Bitcoin is safe and secure, as well as confidential, but the key advantage is that Bitcoin is not controlled by any kind of authorities, so it has no boundaries!
Let’s compare these advantages with USC. This currency is capable of providing confidentiality at a proper level. Moreover, taking into account a market the new currency is oriented to, it is possible to affirm that this aspect will be of secondary importance, because USC won’t be available to ordinary customers. We can only speculate what concept the bank is going to imply; however, it is evident that banking structure is interested in continuing standard service and serve larger clients using its own cryptocurrency.
As for the safety and security, the likelihood that new currency will reach the level of Bitcoin network is rather low. Of course, UBS will do its best and implement the cutting-edge technologies, but it is almost impossible to reach the hashing level of Bitcoin. However, comparing USC with unreliable at all respects traditional methods, the new currency gets the upper hand.
Certainly, new money won’t replace Bitcoin. It won’t be used in countries with developing economy; it won’t be used by people without bank accounts; it won’t be available to Internet-casinos and all kinds of online-markets, so it won’t become an opportunity for speculative extra-earnings. Nevertheless, the new currency is able to overpass Bitcoin in the field of fast and reliable settlement of transactions for large financial institutions.
From a standpoint of Bitcoin-investors a perspective of a new cryptocurrency doesn’t look good. If UBS launches a planned project which is currently in the stage of development, Bitcoin position will be weakened. It is obvious that in any scenario, apart from chosen concepts, launching of this project will influence Bitcoin value.
However, it’s not all that simple as UBS would like it to be. To hold to the concept of “large partners” it is necessary first of all to attract those partners as two or three partners won’t suffice. Adequate functioning of this mechanism of payments in virtual currency demands adjusting regulations of huge number of financial organizations and banks worldwide to the single mutually beneficial standard – an intricate but feasible task. Wall Street Journal has already been informed by UBS that partnership talks are in the process, however, no any specific partnership strategy has been selected.
If successful launching of the new currency would require only partner agreements, the task would be rather easy. Besides partnership there is a problem of controlling transactions also known in the industry as “Bitcoin-mining”.
This problem is not less complicated than partnership aspect, and justly shares the first rank in the list of priorities.
To reduce costs on transaction control USC has to imply a system similar to the one of Bitcoin. Otherwise the bank has to undertake and transfer some powers related to the confirmation of transactions to its partners, which can undermine the trust in the new currency. Such a turn of events is unlikely because it is unreasonable to create a virtual currency when transactions will be monitored by a bank employee. In other words, it is called regression.
It should be mentioned that UBS is a large bank, so if it announces a project, most likely the project will be put into practice. Time will show whether the project will be successful, but as of today, despite a competitor for Bitcoin is showing up, investors actually perceive the situation rather positive than negative. Why? Because there is no growth or development without competition; nobody knows what the competition of virtual currencies will lead to, because such a situation takes place for the first time in the history. We are witnessing an important event!